Insurance Considerations Before and During Divorce

One could think that there is not much important to consider about insurance. But then again, there might be much to consider, if you stop and think about how your future might be impacted.

Insurance is, after all, insurance. Not to be redundant, but to remind you that it is a protection, just in case, or in case of a particular situation or situations that you may experience in the future. We might purchase insurance and not need it. And alas, we say, well that was a waste! Well, correct, it might not be needed, but unfortunately, because we can’t predict the future , you don’t absolutely know if you need it or not, so we will discuss some of the instances you might need insurance for and how you may be impacted if you do not have insurance.

Health Insurance

Let’s discuss health insurance. You may be covered by your spouse’s health insurance through their employer. Once the divorce is final, you will no longer be able to be covered under your spouse’s insurance. You will have to plan in advance, to obtain your own health insurance coverage. Depending on your age and your health, you could be faced with very high premiums, or having a condition be excluded from insurance coverage completely. If you have a history of depression, other serious medical conditions, implants, drug or alcohol abuse, those conditions may likely not be covered, and even if they are, the cost of insurance could be much, much higher, or they could be excluded completely from being covered. It would be wise to check around to see what insurance would cost for an individual policy. Often times, the best option is to find employment where group insurance is provided, but that is not always easy to accomplish. As a part of your health and financial planning, it would be beneficial to gather this information well in advance.

Often, we don’t think about insurance until we already know we need it. We need it, because we have a condition that we are being treated for and if we have to change insurance, often we can’t get the coverage any more. Remember, when we are making application for insurance, we will be asked a cadre of questions, all of which can and will likely be verified by the doctors who have treated us in the past.

COBRA

Yes, you might be entitled to COBRA coverage with your employer or your spouse’s employer. The same thing goes here; if you opt for COBRA and then in the meantime , between being on COBRA coverage and obtaining an individual policy of your own, you develop a new condition, you will now have what is called a pre-existing condition that may make you ineligible for insurance through an individual policy in the future. There are more protections and acceptances with an employer’s group insurance, but so few small companies are able to offer health insurance. Each situation needs to be weighed to determine what might be the best choice for you.

Disability Insurance

Disability insurance is often purchased by professionals that earn a high income and they are the primary breadwinner in the family. This insurance pays a benefit if the insured is disabled for an extended period of time. This is very costly insurance and generally does not go into effect immediately.

You can also purchase disability insurance when you are signing for loans; this insurance is to cover the payment of your loan in case you are disabled.

Life Insurance

This pays in the event of your death or your spouse’s. It is possible, even if there is already a policy in place on your spouse, for you to own that policy. The owner controls the beneficiary designation and any changes to the policy. One of the most inexpensive life insurance means is through an existing employer, but there is a limit an often it is not sufficient to cover the needs.

If you are looking for a new policy or additional coverage, you must pass health exams and answer rigorous questionnaires. This could be a problem if this is needed to cover a large debt such as a business debt or alimony an d the insurance is not secured prior to the agreement or finalization of divorce and you find out after the fact that the insurance coverage is denied! A good reason to do your homework early in the process.

Term Life Insurance

This less expensive than whole life insurance and typically lasts a certain period of time.

Whole Life Insurance

More expensive than term life insurance; this builds up a cash value.

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